Advertisement
YOU ARE HERE: LAT HomeCollectionsOil Prices

OPEC Output Tops Its Self-Imposed Quota for March : Doubt Is Cast on Cartel's Ability to Keep Prices Up

May 07, 1987|From Times Wire Services

PARIS — OPEC oil production rose sharply last month and topped the cartel's self-imposed ceiling for the first time since January, the International Energy Agency said Wednesday night.

Two of the 13 member countries were reported to have increased production to the limits of the national quotas set by an agreement reached Dec. 20, and five others were said to be exceeding the quotas.

The report introduced a new element of doubt about the ability of the Organization of Petroleum Exporting Countries to stick to its overall production limit of 15.8-million barrels of crude oil a day through June and to hold the line on its official average price of $18 a barrel. A barrel is the equivalent of 42 gallons.

Analysts have attributed a recent firming of oil prices to a widespread belief in the industry that OPEC was resisting pressures to pump more than its agreed total.

At the close of Wednesday's trading on the New York Mercantile Exchange, contracts for June delivery of West Texas Intermediate, the benchmark grade of U.S. crude oil, stood at $19.23 a barrel, more than $1 above OPEC's target price.

Expects Higher Demand

Meanwhile, in remarks made before the IEA report was released, Kuwait's oil minister said demand for oil will increase in coming months and that world prices will stabilize at $18 to $20.

The minister, Ali al Khalifa al Sabah, who last month opposed calls for higher oil prices, said he expected OPEC ministers to discuss the possibility of raising prices at their meeting in Vienna on June 25. "I expect that demand for oil will increase during the next two quarters," he told Kuwait's Al-Rai al-Aam newspaper.

The IEA report said OPEC output was 16.6-million barrels daily in April, up from an average 15.7-million barrels daily in the January-March quarter. January production had been above the official ceiling, at an estimated 16.5-million barrels a day, mainly because of technical problems in scaling back output after the December accord.

The production ceiling was designed to dry up the world oil glut and stabilize prices at the $18-a-barrel average.

The energy agency said in its monthly oil market report that the rise in OPEC production in April was due to large increases in output by Saudi Arabia, the cartel's largest producer, and by war rivals Iran and Iraq. The Saudi and Iranian increases moved production up to quota limits but Iraq is exceeding its quota and has vowed to do so until it is granted production parity with Iran.

Others reported to be exceeding their quotas are the United Arab Emirates, Kuwait, Libya and Gabon. Other members of OPEC are Algeria, Ecuador, Indonesia, Nigeria, Qatar and Venezuela.

Violation of quotas in the past has weakened OPEC's ability to keep prices high.

The energy agency's statement conflicted with an assertion last week by OPEC's president, Nigerian Oil Minister Rilwanu Lukman, that the cartel was abiding by its production ceiling and deliberately resisting demand for an extra 800,000 barrels a day of its crude.

The 21-nation International Energy Agency was created in 1973 to coordinate the Western industrialized nations' response to an Arab oil embargo and OPEC's rapid price increases.

Advertisement
Los Angeles Times Articles
|
|
|